What to do with $30k in cash?

I was watching the show Pawn Stars the other night when a man sold the body of a classic car to the owners for $30k. He was hesitant until the owner told him that it was “cash money, 100 dollar bills”. The man smiled and accepted.

Okay, now I know that the cash is better because you can hide it from the IRS. But in order to hide it from the IRS, you can’t really buy anything nice with it.

You can’t just take $30k in hundreds to a car dealership and buy a car with it. It gets reported. You can’t deposit it in a bank. I guess you just keep it at home and make frequent, small purchases with it, but that would seem like an inefficient use of that much money. Surely you can invest it and come out ahead in the long run, even after paying taxes.

What would you do with it?

I could get through $30k pretty quickly by just using it for groceries, restaurants and a few bigger purchases like any new furniture I’d like, clothes and some electronics.

$30k isn’t that much and you’re not going to lose much interest nowadays by not keeping it in the bank.

You could deposit a little at a time - $100 or so a week.

And use the rest as cash for your smaller expenditures like ColdPhoenix said.

I’m just here to post the obligatory “hookers and blow” comment.

Carry on.

Keep it in a safe and use it for emergencies.

Another thought. Wouldn’t the pawn shop have to show a $30k cash expenditure on their books somewhere?

Atlantic City, baby…all of it on red. Yes, you’ll then have to pay taxes on it, but since you’ve just doubled your money the hit is far less painful. What could possibly go wrong?

I’m with the small-to-medium sized purchases. And smallish deposits into the bank. But the key is, vary the amount you deposit each week. If they look at your books, and see you’re depositing $100 every Monday, that might be suspicious. But if some weeks, you deposit $200 and some weeks you deposit $75 and some weeks you deposit $150, etc., it won’t raise the same red flags.

I’m sure I could go through $30k on groceries, gas, odds and ends for the house. Another way to keep it off the books would be do have a service performed (like home renovation or fixing a car) and if the contractor keeps if off his books by accepting only cash, you could get a lot of work done for that money. I would probably pay a friend of mine to fence in my backyard and do some other work on the house, and pay him only in cash. He’d like that, I’d like that. Win-win.

To quote a popular scene from The Shawshank Redemption

“Do you trust your wife?”
Couldn’t you give it to your wife to hide it from the taxman? Saying you were married?

Also, I remember a scene from The Sopranos where Carmela took cash from Tony’s secret stash and invested it in several places.

One of the brokers said to her, “Did you know that anything under xx doesn’t have to be reported?” And she said a little too innocently, “Oh really? You don’t say.”

Wouldn’t a pawn shop have to provide the documentation to the IRS for large cash transactions?

So the guy is dumb enough to be on TV, accepting cash, and we are worried that he might spend it in such a way that the IRS finds out?

I’m not fond of tax cheats, so I’d report it and do what I wanted to with it. However, being a capital asset, I’d make sure to only pay taxes on the gain.

But if I wanted to hide cash from the IRS - and that small of an amount - yeah, keep it in a safe, use it for smallish cash expenditures. A larger amount I’d move offshore.

Curse you lost4life! Beaten to the punch.

It’s not out of the realm of possibility. (Not quite the same thing, but someone on a much more popular show running into IRS issues.)

That’s what I was wondering. He was selling something, unless it appreciated in value it’s not income so not reportable. Is this correct?

Carmella invested less than $10,000 because it was a cash transaction, and banks and other financial institutions have to report cash deposits above $10,000 to the Treasury Department. That’s not for tax purposes, but because people throwing around wads of cash that big are assumed to be suspicious.

But depositing less than $10,000 in cash doesn’t exempt them from reporting any earnings, no matter how small, on her investments, to the IRS.

A “friend of mine” had this problem once.

It wasn’t quite 30K but it was a nice stack of hundreds.

She put them in a safe place and went through them slowly…ever 3rd week or so she would buy her groceries with a hundred instead of a debit card and she would grab one every now and then for “walking around money” instead of making an ATM withdrawal. She also made a few purchases in the $500 or so range in cash. This allowed the money to be slowly spent and there wasn’t a drastic change in her spending pattern.

She never deposited any of it in her bank, though.

I guess it’s been discussed but would there even be tax on that money and if so, how much would it be?

But anyway, I’d probably but a couple nice things that aren’t too expensive, just a couple thou. Then I’d keep the rest in a safe and use a little at a time to pay some local bills and groceries and deposit a little at a time. Since I wouldn’t be spending my paycheck I could build up some savings and keep a buffer there. I’d also try to go the under the table home repair route.

There’d be a tax on the capital gain.

For instance, assume that the body was sitting in a garage he owned, where it had been for 20 years. He probably doesn’t have a “cost” for it, so its all gain, and all taxable. It is, however, long term capital gain, so its only a 15% tax.

Now, if he bought the body 10 years ago for $10k and is selling it for $30k, he has $20k in gain - again, long term.

If he bought the body for $100 within the past year, he has $29,900 in short term gain taxed at his marginal rate.

I think, but am not sure (its been a few years since tax class) he can also write down holding costs, but they should be documented. Guys looking to take cash payments on TV (and yeah, I remember Richard Hatch - also not the sharpest knife in the drawer) are probably not keeping really accurate records on the rent on the garage they’ve been storing their car bodies in.

I could easily buy new furniture for a bedroom and living room as a cash transaction and not worry about it showing up anywhere. I’ve essentially traded one physical assett for another and not bothered the tax man at all.

Or, as others have suggested, I could keep it in a safe and dole it out in smaller amounts for regular purchases